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Why The Future Of Healthcare Is A 'Moving Target'


Moderator Asif Kazi, software strategy manager for Partner Engineering and Science kicked off Bisnow's Orange County Healthcare Forum by asking presenters: "What does the lay of the land look like today, and what will it look like 20 years from now?" That's Asif, above left, with Michael Lehman and Bobby Eagar.

Redina Healthcare Real Estate SVP of business development Neil Carolan noted healthcare reimbursement is changing from fee-for-service—a specified amount for service rendered—to outcome-based. On top of that, the 2016 federal budget recently passed by Congress requires outpatient facilities must be within 250 feet of a hospital to be paid at a hospital rate. Neil suggested buildings built today will be obsolete tomorrow.

“Healthcare providers are always last to pick up on the latest trend, and, by that time, it’s old news," added Dignity Health president Dr. Margaret Peterson, pointing out there’s not much difference between medical office buildings (MOBs) today and 20 years ago.

Ewing Cole principal Michael Lehman said it can take a decade to get one large effort underway in the healthcare sector, and during that time healthcare will undergo huge changes. Time is the enemy. He agreed innovative buildings designed today will be obsolete before they open.


Asif asked the panel’s developers and builders how costs could be reduced in the pre-construction phase. DPR Construction project executive Bobby Eagar said his clients generally want to target a 20% cost reduction. He contended that OSHPD (Office of Statewide Health Planning and Development) is not the reason the cost of MOBs is rising, but rather unions are driving costs up. In right to work states, such as Texas, carpenter rates are $30 to $40/hour, but in California their rate is $60 to $100/hour, he said.

"OSHPD is the devil we know,” added Michael, suggesting city regulations are making it difficult to build MOBs and reduce construction costs.

A big challenge is designing efficient spaces that will be relevant in the future, pointed out Children’s Hospital Orange County (CHOC) director of facilities management Devin Hugie (pictured right, with Neil Carolan and Scott Mackay). “The question is, 'What is efficient space now, and what will it be in the future?'” He said CHOC spent a fortune on medical records storage, which became obsolete with the advent of electronic health records. “Now we’re all looking at population health, so it’s hard to say where that’s going to go.”

Population health refers to the health outcomes of a group of individuals, including the distribution of outcomes within the group. It is an approach to healthcare aimed at improving the health of an entire population.


Asif asked the provider panelists what services they are moving off hospital campuses. Margaret noted both state and federal bills limit the amount that can be charged at hospital-owned outpatient facilities. Rather than taking services off-campus, Dignity Health is partnering with outpatient facilities already providing services, such as outpatient surgery, which would generate some revenue for referrals.

Scott Mackay called healthcare a moving target. “The big issue is how to deliver care more creatively, efficiently, more safely—what is the best thing for patients?” People have choices, which is making a big difference in facility development, he added, noting providers are trying to figure out what patients want and what will bring them in the door. Scott said location is important, as people are looking on the Internet before deciding where to go.

Michael said old hospitals have been upgraded or replaced, but the next wave of development is adaptive reuse. “As services move out of hospitals, there is a lot of vacant space (in hospitals), and we don’t know what will fill that space.” Margaret said Dignity is filling vacant space with acute care centers. “It’s tricky, but can be done,” she said.

Bobby noted procedures formerly done in hospitals are being done in outpatient facilities. For example, heart valve replacement is now being done in outpatient CATH labs. New technologies, such as linear accelerators, require larger facilities than their predecessors. His firm is working on upgrades and expansion of older facilities to accommodate the broader range of procedures being done on an outpatient basis, as well as new technologies.


Neil said single-purpose facilities, like freestanding heart hospitals are now obsolete. These types of services are being downsized and moved into vacant hospital space, essentially creating hospitals within hospitals. Hip replacement, which used to require a three- to five-day hospital stay is now an outpatient procedure. Neil also noted outpatient operating room turnaround is five minutes on average, while it’s 60 to 70 minutes in a hospital OR. He said Redina is developing surgery centers to accommodate the various outpatient surgical procedures.

Margaret (pictured here with Bobby Eagar, left, and Scott McKay) said a lot of hospitals are still in “old mode,” and won’t be around in 20 years. "Innovation is key,” she continued. “You have to look at where people will go to receive care 20 years from now—how they will access healthcare." The younger generation wants to use the latest technologies, such as robots for valve replacement, she said, and doesn’t have the patience to sit for 30 minutes in a waiting room.


Asif said devices like the Apple Watch and Fitbit allow people to monitor their own health and are reshaping how doctors follow patient health and gather health information like vitals. He asked the panel how high-tech devices like these are going to affect healthcare and facility development?

Devin said it already is affecting facilities' amenities, with families expecting WiFi service and charging outlets in waiting rooms. Bobby said technology also is affecting the building process, with project managers, subcontractors, architects and engineers communicating via iPads on job sites, which is speeding projects to market and reducing costs.

Neil suggested developers sit down with medical building users and find out what they want, as every location is different. For example, Redina put electrical outlets on the outside of a MOB in Arizona, because the facility is in a retirement community where patients drive golf carts instead of cars.

Margaret thinks the nation is moving toward socialized healthcare, like in Canada and Europe. “We need to get used to the idea—basic care for all,” she stressed. She suggested universal healthcare will cause healthcare costs to drop dramatically. In Japan, a CT machine costs $100k, compared to $10M in the US, Margaret said, explaining Japanese manufacturers make a CT machine for that price because the government told them that’s all it would pay.

Above is Bisnow’s SoCal business manager, Lucas Netchert, who served as both moderator and event organizer.